"The requirements to represent an underwriter are pretty stringent," said Michelle Sweet, a spokeswoman for the association.
But problems arise, industry experts said, when title company owners who are facing financial difficulties use money in their escrow accounts to operate their business.
Tyler said his office is seeing a spike in complaints involving title companies not making mortgage payments, a trend the commissioner attributes to the slowing real estate market.
He said Day Title's case, however, represented a "very substantial loss."
Rogers, of Security Title, said a case with the kind of allegations brought against Day Title "is more likely to occur in a market such as we're in now where real estate is slow and agents don't have the income they used to have to support the operations."
Still, Rogers noted that Security Title does not fully know why the money went missing from Day Title's escrow account. Its investigation is continuing.
Lynn T. Krause, an Annapolis-based attorney representing Security Title, could not say how much money Security Title might end up covering but said it is paying off "several" mortgages.
"The homeowners whose liens were not paid, they won't be affected at all," Krause said. "Their liens will be taken care of."
Security Title is "handling all the things that have been discovered so far and will continue to do so if there is more," Krause added.
Security Title discovered missing money from Day Title's escrow account in a preliminary audit after being alerted to unpaid mortgage payments for an Anne Arundel County homeowner by Wells Fargo Bank on May 8, court documents show.
After numerous discussions with Williams, Security Title conducted an audit of Day Title's books and records May 19 and found that its escrow account was short between $1.5 million and $2 million, court filings show.
A request for emergency dissolution and receivership was filed the same day.
The court granted Security Title's request May 22.
Williams eventually made those mortgage payments for the Anne Arundel County homeowner, but Security Title said there is still accrued and unpaid interest due to the lender.
Eric M. Smith, who has a law degree and financial experience, was appointed as Day Title's receiver. Smith, of Annapolis, said his job will be to take control of the assets and recover as much money as possible for creditors.
hanah.cho@baltsun.com
